For Immediate Release
Chicago, IL – August 09, 2010 – Zacks.com Analyst Blog features:
Abercrombie & Fitch Co. (ANF), Gap Inc. (GPS), Macy Inc. (M) American Eagle Outfitters Inc. (AEO) and J.C. Penney Co. (JCP ).
Here are highlights from Friday’s Analyst Blog:
Retailers’ July Sales Sluggish
Retailers are off to a slow start in the second half of the year as July same-store sales came in below expectations. July is usually a mild sales month as retailers rely heavily on promotions to clear out their summer stocks and spring merchandise as they head into the back-to-school season at the end of the month.
Another factor which affected retailers during the month is high unemployment rate. The high unemployment rate hampered the spending pattern of consumers. Until the employment scenario improves, the companies would have to continue with aggressive promotions to drive sales.
Hot weather and a weak economy hampered the shopping urge of consumers and hurt the sales of some retailers in July while others still reported strong performances.
Among the stronger performers were Abercrombie & Fitch Co. (ANF), Gap Inc. (GPS) and Macy's Inc. (M), each of which reported better-than-expected same-store sales. Among the weak performers were American Eagle Outfitters Inc. (AEO) and J.C. Penney Co. (JCP ).
Abercrombie & Fitch
Amid the many disappointing performances among retailers, Abercrombie & Fitch was one of the few to witness standout results. The company reported solid 7% growth in comparable store sales in the month. Abercrombie’s heavy reliance on promotions coupled with the strategy to offer products at discounted prices propelled the growth in sales. Customers responded favorably to the lower priced merchandise. However, this came at the expense of lower margins as the company relied heavily on promotional strategies to boost sales.
Impressive trends in its direct business and benefits from the opening of international flagship stores led to a robust sales growth of 81% over the prior month to $47 million in the international market, while domestic net sales increased 8%. This bolstered total net sales by 17% in the month. Total net sales came in at $270.9 million compared to $232.3 million in the prior-year period.
Abercrombie & Fitch, abercrombie kids and Hollister segments' same-store sales growth of 10%, 1% and 4% respectively boosted the overall comparable store sales growth.
Gap Inc.
The Gap reported an increase of 1% in comparable store sales growth in July after a flat growth in June. Gap’s aggressive use of promotions, both in-store and online, pushed up traffic. Total net sales came in at $948 million compared with net sales of $924 million in the year-ago month.
Total comparable store growth at The Gap was the outcome of Banana Republic North America same-store sales growth of 2%, a boost of 6% at Old Navy North America and international same-store sales increase of 3%, which were partially offset by shrinkage of 6% in same-store sales growth at Gap North America.
Gap expects to earn 34 to 35 cents per share in the second quarter of fiscal 2010.
American Eagle Outfitters
One of the disappointments in July was American Eagle Outfitters which reported flat comparable same-store sales growth. The company needed deeper promotions to clear out its summer merchandise, resulting in a high single-digit decrease in average unit retail. On a positive note, American Eagle was able to continue to clear its summer merchandise and ended the month with lower level of inventory.
Net sales for the month grew 2% to $219 million from $215 million in the year-ago month. American Eagle expects earnings per share for the second quarter to be in the range of 12 to 13 cents per share.
Our Take
We believe that the improving U.S. economy, some early tentative signs of a turnaround in the labor market and pent-up demand held down by the recession have come together to perk up the retailers. However, the recovery remains fragile and requires a boost from a sustained and significant recovery in jobs creation and income growth. In the end, it will be the turnaround in jobs and income that will outweigh other drags.
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5515.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5517.
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=5518.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/zacksresearch
Join us on Facebook: http://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts.
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact:
Mark Vickery
Web Content Editor
312-265-9380
Visit: www.zacks.com
AMER EAGLE OUTF (AEO): Free Stock Analysis Report
ABERCROMBIE (ANF): Free Stock Analysis Report
GAP INC (GPS): Free Stock Analysis Report
PENNEY (JC) INC (JCP): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
Zacks Investment Research
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
